“Regulators don’t have the right to pick which businesses are moral.”
– U.S. Rep. Blaine Luetkemeyer, R-Mo.
What is it about this nation’s so-called talented, tolerant and transparent executive branch that makes it pursue and harass innocent Americans with a Gestapo-like passion?
No, we’re not talking about the partisan bureaucrats at the Internal Revenue Service who played red-tape bingo with conservative groups.
This time we’re talking about their partisan brethren at the Department of Justice who, under the guise of fighting consumer fraud, appear to be directing federal regulators to persecute legal business ventures in two-dozen industries the Obama administration finds repugnant – including gun dealers.
Unlike the widening taxpayer-targeting scandal, this Justice Department abomination has an official name – “Operation Choke Point,” aptly titled because it’s designed to literally choke off funding by making it difficult for businesses to retain and receive banking services.
As with the IRS targeting scandal, the Americans singled out by Operation Choke Point are considered guilty until proved innocent. And because bureaucrats are trying to shut down their businesses via their banks – which are cajoled under threat of costly federal subpoenas and investigations – those targeted are essentially denied legal due process in a court of law.
Just what are these “high-risk” businesses? They include legal-but-lowbrow ventures such as payday lenders, online gaming sites and pornography shops, but also more mainstream establishments such as gun-and-ammunition stores, tobacco merchants, fireworks companies and coin dealers.
Oddly – or perhaps not –
legalized marijuana shops and abortion providers did not make Operation Choke Point’s list of targeted industries.
The Federal Deposit Insurance Corp. recently stopped providing its hit list of industries to banks, acknowledging it created “a misperception” that regulators wanted institutions to avoid dealing with certain types of businesses.
But former FDIC Chairman William Issac called the program “one of the most dangerous” he has seen in 45 years as a bank regulator, attorney and board member.
“Once banking services are cut off to these state-licensed and regulated businesses, there is no chance for the business to appeal the decision,” he wrote in a column for The Hill. “The company is simply in a business that, while legal, has been determined ‘undesirable’ and therefore ‘high-risk’ by the federal bureaucracy. This Orwellian result is frightening.”
The program that began in secrecy in 2013 came to light earlier this year amid complaints from businesses whose banking ties were severed after federal regulators contacted their financial institutions.
Internal Justice Department documents show that the program continued even after Attorney General Eric Holder was informed it was hurting small businesses that were being dropped by their banks.
“We have also learned from industry sources that many banks are taking note of our activity and that of the regulators and doing what they should have done all along – due diligence to know their customers,” one Justice official noted in a brief to Holder.
Unfortunately, that government-coerced “due diligence” has led to wholesale termination of banking services in targeted industries.
A survey by the Financial Services Centers of America revealed 14 of 61 member banking relationships had been terminated since November. In June, the Community Financial Services Association and Advance America, a payday lender, filed a lawsuit against the FDIC, claiming that it exceeded its statutory authority and that its actions were “arbitrary and capricious.”
The United States Consumer Coalition announced a $5 million media campaign against Operation Choke Point, claiming that it was “created by the Administration to shut down lawful businesses by ‘choking off’ their access to banking services.”
The National Shooting Sports Foundation said financial services have been frozen for many of its members as a result of Operation Choke Point.
Kelly McMillan of McMillan Group International, an Arizona-based gun manufacturer, said her company’s 12-year relationship with Bank of America was terminated abruptly, which she sees as a back-door attempt at gun control.
“This is an attempt by the federal government to keep people from buying guns and a way for them to combat the Second Amendment rights we have,” she said.
Keep in mind, bureaucrats are targeting and disrupting businesses not because they have evidence of wrongdoing, but because they allegedly think they may be engaged in fraudulent activity.
It’s disheartening to see that the outrage over this governmental overreach is limited primarily to conservatives, as it is with the IRS targeting scandal. We wish more liberal-minded Americans would understand that nobody is safe when government exceeds its bounds.
Where would these fence-sitting Democrats be if Republicans held the White House and were directing bureaucrats to have financial institutions sever ties with, say, Planned Parenthood?
U.S. Rep. Blaine Luetkemeyer, R-Mo., a former bank examiner, last month introduced legislation that would end Operation Choke Point for a year while the House Oversight Committee investigates the operation.
“It is time to stop these back-door attempts by government bureaucrats to blackmail and threaten businesses simply because they morally object to entire sectors of our economy,” he said.
Rule of law is the foundation of American commerce. If companies break the law, then by all means go after them.
But “choking” out businesses for doing nothing more than being morally at odds with the current administration smacks of totalitarianism, which is about as un-American as it
Congress, when it reconvenes next month, should make passage of the Luetkemeyer bill a top priority.